Pulte Homes Inc. is buying Centex Corp.

Deal will make Pulte the nation's largest homebuilder

April 09, 2009|By From news services

Pulte Homes Inc. is buying Centex Corp. for $1.3 billion in stock in a deal that will create the nation's largest homebuilder and could spark further consolidation in an industry that is suffering the worst real estate recession in a generation.

The transaction will combine Pulte's strength in active-adult and retirement housing with Centex's hefty market share of first-time homebuyers.

The acquisition also will give Pulte large tracts of land in Texas and the Carolinas, two of the most resilient real estate markets, and a presence in 29 states and Washington, D.C.

The new company, which will also include the Del Webb, DiVosta and Fox & Jacobs brand homes, will keep the Pulte name and headquarters in Bloomfield Hills, Mich. There will be an unspecified number of job cuts.

"It allows us to not only survive, but thrive in any economic climate," said Richard Dugas Jr., Pulte's president and chief executive, who retain those titles over the combined enterprise.

Faced with a 75 percent slide in new home sales from the peak in mid-2005, homebuilders have slashed construction and prices. The deal touched off speculation that other homebuilders with battered stock prices may be easy targets.

The combined company will have roughly twice the revenue of its next largest rival, D.R. Horton Inc. Pulte and Centex pulled in a total of $11.61 billion in the last 12 months, compared to D.R. Horton's $5.82 billion.

The new industry behemoth will be better poised to take advantage of the market's recovery, which executives said is just beginning.